Financial Reporting · Professional and Ethical Duty of a Chartered Accountant

Professional Behaviour under Subsection 115 of the Code of Ethics

Updated 5 October 2026

Professional behaviour is one of the five fundamental principles in the Code of Ethics. You must comply with relevant laws and regulations and avoid any conduct you know, or should know, might discredit the profession. This includes honest marketing: no exaggerated claims and no disparaging remarks about others. To answer, state the principle, apply it to the facts, then conclude.

Understand Professional Behaviour under Subsection 115

The Code of Ethics sets five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Section 115 deals with the last one. This topic is examined in Paper 3, Advanced Auditing, Assurance and Professional Ethics. Think of it as the rule that protects the public's trust in the whole profession, not just in you.

The principle has two parts. First, you must comply with relevant laws and regulations. Second, you must avoid any conduct that you know or should know might discredit the profession. The words "should know" matter, because the test is objective. Cite paragraph 115.1 A1 for the principle and the discredit test.

Conduct that discredits the profession is judged by how a reasonable and informed third party, weighing all the specific facts and circumstances available to the member at that time, would view it. So you ask: would such a person conclude this act harms the good reputation of the profession? If yes, it breaches the principle.

The Code also covers marketing and promoting yourself, in paragraph 115.2 A1 of Section 115. When you market your services or your work, you must not bring the profession into disrepute. You must be honest and truthful. Do not make exaggerated claims about the services you offer, your qualifications or your experience. Do not make disparaging references or unsubstantiated comparisons to the work of others.

The Code is not the only source of rules on advertising. The Chartered Accountants Act, 1949 (First Schedule, Part I, where clauses (6) and (7) are commonly cited for soliciting clients or professional work by advertisement or circular, and for advertising professional attainments or services) and ICAI's Council Guidelines on advertising and solicitation also apply to a member's promotion. Verify the clause numbering against the material prescribed for your attempt. Do not assume that meeting the Code's test on exaggeration alone clears a promotion.

In exams, this topic mostly appears as a short case. A member sends a boastful brochure, runs down a rival, or ignores a legal requirement. You must spot the principle, name the breach, and say what the member should do. Keep the Code's wording close, but write in your own words. Check the edition of the Code prescribed for your attempt, because ICAI's text and paragraph numbering are what you will be tested on.

Key rules to remember

Principle of professional behaviour (Section 115): Professional behaviour = comply with relevant laws and regulations + avoid conduct that the member knows or should know might discredit the profession; State both limbs in every answer. Many students write only the second. Cite paragraph 115.1 A1.
Test for discredit: Discredit = what a reasonable and informed third party would conclude, weighing all specific facts and circumstances available to the member at that time; The test is objective. The member's own intention does not decide it.
Marketing and promotion guidance (Section 115, paragraph 115.2 A1): When marketing or promoting yourself: do not make exaggerated claims about services, qualifications or experience; do not make disparaging references or unsubstantiated comparisons to the work of others; Use this when the case involves advertising, brochures, websites, social media or pitching for work. The Chartered Accountants Act, 1949 and ICAI's Council Guidelines on advertising and solicitation apply separately, so satisfy both.
Key phrase to quote: "knows or should know"; It brings in an objective standard, judged on the facts and circumstances available to the member at that time.

How to solve Professional Behaviour under Subsection 115 questions

Use this method for any case or theory question on professional behaviour. It keeps your answer in the provision-facts-conclusion form.

1Read the facts and underline what the member did: an act, a statement, an omission or a promotion.
2Name the fundamental principle: professional behaviour under Section 115. Note if another principle is also touched, such as integrity (Section 111) or confidentiality (Section 114).
3State the rule in two limbs: comply with relevant laws and regulations, and avoid conduct that might discredit the profession (paragraph 115.1 A1).
4If the facts involve marketing, add the marketing and promotion guidance in paragraph 115.2 A1: no exaggerated claims, no disparaging remarks or unsubstantiated comparisons. Also check the Act's clauses and Council Guidelines on advertising and solicitation.
5Apply the rule to the facts. Quote the facts and use the reasonable and informed third party test.
6Conclude clearly: breach or no breach. Then state what the member should do, such as withdraw the claim, correct the statement, or comply with the law.
7Check whether the question asks about one item or several. Give a separate conclusion for each.

Quickest way: Rule-Facts-Verdict in four lines

When to use it: Use this when you have limited time, for example a short MCQ or a 4 to 5 mark written part.

Line 1: Name the principle (professional behaviour, Section 115).
Line 2: Write the rule in one sentence with both limbs.
Line 3: Pick the one or two facts that decide the case and link them to the rule.
Line 4: Give the verdict and the corrective action. For MCQs, look for the option that matches honest, non-exaggerated, non-disparaging conduct and legal compliance.

Common mistakes in Professional Behaviour under Subsection 115

Writing only that the member should avoid discrediting the profession and forgetting the duty to comply with laws and regulations.
The discredit limb is easier to remember and sounds more natural.
Fix: Always write the two limbs together. Open your answer with "comply with relevant laws and regulations and avoid conduct that may discredit the profession".
Treating any promotion by a member as a breach, or treating a truthful promotion as always safe.
Students recall the rule against advertising from earlier study and assume all marketing is banned. Others read paragraph 115.2 A1 alone and assume that passing its test clears the promotion.
Fix: Paragraph 115.2 A1 is about how you market. Exaggeration and disparaging comparisons are what it targets. But the Code is not the only source of rules. The Chartered Accountants Act, 1949 (First Schedule, Part I, where clauses (6) and (7) are commonly cited) and ICAI's Council Guidelines on advertising and solicitation also apply. Verify the clause numbering against the prescribed material, and check the promotion against both the Code and these provisions.
Judging discredit by the member's intention.
Students think a well-meant act cannot harm the profession.
Fix: Use the test of a reasonable and informed third party who has the facts. Apply it to the effect of the act, not the member's motive.
Mixing up professional behaviour with confidentiality or integrity and quoting the wrong principle.
Many cases touch several principles at once, and the names sound close.
Fix: Match the facts to the principle. Public statements, marketing and legal compliance point to Section 115. Disclosing client information points to Section 114 (Confidentiality). Being associated with misleading information points to Section 111 (Integrity). Say if a second principle is also involved.
Giving a long general essay on ethics with no verdict.
Students fear missing points and write everything they know.
Fix: Follow provision-facts-conclusion. Use the facts given, and end with a clear conclusion and the action the member should take.

Worked examples

Example 1

CA Meera, a practising member, launches a website for her firm. It says: "We are the best firm in the city. Other firms in our area give poor quality audits, and only we guarantee complete compliance." Does this conduct comply with the principle of professional behaviour? Advise.

Show the solution

Principle: Professional behaviour under Section 115 requires a member to comply with relevant laws and regulations and avoid conduct that might discredit the profession.
Marketing guidance: Under paragraph 115.2 A1 of Section 115, a member who markets or promotes herself must not make exaggerated claims about services, qualifications or experience, and must not make disparaging references or unsubstantiated comparisons to the work of others.
Facts, claim 1: "Best firm in the city" and "guarantee complete compliance" are exaggerated claims. They cannot be shown to be true and could mislead the public.
Facts, claim 2: "Other firms give poor quality audits" disparages other members and has no evidence behind it. It is an unsubstantiated comparison.
Test: A reasonable and informed third party would conclude that such statements harm the reputation of the profession.

Answer: The website content breaches the principle of professional behaviour. CA Meera should remove the exaggerated claims and the disparaging comparison, and describe her services honestly and factually.

Example 2

CA Rohan is a member in practice. A client asks him to help file a return that he knows leaves out a material item of income that the law requires to be reported. Rohan thinks the omission is common in the industry and that no one will find out. He agrees to file the return. Discuss with reference to Section 111 (integrity) and Section 115 (professional behaviour) of the Code of Ethics. State which principle is primary.

Show the solution

Principle, Section 115: A member must comply with relevant laws and regulations and avoid conduct that might discredit the profession (paragraph 115.1 A1).
Facts: Rohan knows the income must be reported under the law. Filing a return without it does not comply with relevant laws and regulations. This is a breach of professional behaviour.
Industry practice and the low chance of detection are not defences. The duty to comply with the law applies to the member whether or not anyone finds out.
Discredit limb: A reasonable and informed third party who knows the facts would see this as damaging the reputation of the profession.
Primary principle, Section 111 (integrity): The main concern is integrity. Rohan knowingly associates himself with a return that he knows is misleading because it omits material income. A member of integrity must not be associated with such information. Section 115 is the secondary principle here. The conduct may also be a breach of law itself.
Action: Rohan must not be associated with the false filing. He should decline to file it, advise the client to report the income, and withdraw from the work if the client refuses.

Answer: The primary breach is of integrity (Section 111), because Rohan knowingly agrees to be associated with a misleading filing. He also breaches professional behaviour (Section 115) by not complying with relevant laws and regulations. He should decline to file the return as the client wants, advise the client to report the income, and withdraw from the work if the client refuses.

Exam tips

This topic sits in Paper 3, Advanced Auditing, Assurance and Professional Ethics. Answer in provision-facts-conclusion form, as the paper expects.
Write the principle name and Section 115 in the first line. It signals the right provision straight away.
Always give both limbs: legal compliance and avoiding discredit. Add the marketing guidance in paragraph 115.2 A1 only when marketing or self-promotion is in the facts, and mention the Act's advertising and solicitation clauses alongside it.
In case-scenario MCQs, watch for options with exaggeration, guarantees or comments on other members. These are usually the wrong choices when the question asks what is acceptable.
Quote facts from the case in your application. A bare rule with no facts earns few marks.
Cross-check with the paragraph numbering and wording in the edition of the Code prescribed for your attempt.

Practice questions from Professional and Ethical Duty of a Chartered Accountant

Professional Behaviour under Subsection 115: frequently asked questions

What does Section 115 of the Code of Ethics cover?

It covers the fundamental principle of professional behaviour. A member must comply with relevant laws and regulations and must avoid conduct that the member knows or should know might discredit the profession. Paragraph 115.1 A1 explains the discredit test.

What does the marketing guidance in paragraph 115.2 A1 say?

It guides members who market or promote themselves and their work. They must not make exaggerated claims about services, qualifications or experience, and must not make disparaging references or unsubstantiated comparisons to the work of others. The Chartered Accountants Act, 1949 and ICAI's Council Guidelines on advertising and solicitation apply separately, so a member must satisfy both.

How is conduct judged to discredit the profession?

The test is how a reasonable and informed third party would view it, weighing the specific facts and circumstances available to the member at that time. The member's own view of the act does not decide the matter.

How should I structure an ethical case study answer on this topic?

Name the principle, state the rule, apply it to the facts, and end with a clear conclusion and the corrective action. Keep each step to a line or two and mention any other principle that is also involved.